DECC moves to reduce grid payments

The Department of Energy and Climate Change (DECC) has announced its formal response to a consultation on the future of transmission constraints licences.

The payments, which are currently made to electricity generators to reduce or increase what they export to the grid, are to be more rigorously enforced. According to DECC, this could save £300m over the next five years by preventing behaviour which allows generators to ‘profit unfairly at the expense of consumers during periods of transmission constraint’.

During 2011/12, £324m was paid out to generators by the National Grid in order to balance the load at times when congestion prevented the transmission of electricity from its source to where it is needed. DECC says this represents an additional 40p on consumer bills for this period.

Energy minister Charles Hendry said: “It is vital that the cost of balancing electricity system is a fair one. The changes we are making aim to strike a balance between compensating generators for financial risk, and protecting consumers from excessive charges.

“Going forward, we expect upgrades to the electricity network to improve the flow of electricity through the system and reduce the need to constrain transmission.”